We review the downsides to hosting a membership-style coffee subscription at your café.
BY MAI GAN
SPECIAL TO BARISTA MAGAZINE ONLINE
Photos courtesy of Mai Gan
Yesterday, we explored the possible benefits of operating a subscription-based membership at your coffee shop, as in charging a fixed monthly price for unlimited drinks. Today, we look at some of the potential cons of this model.
CONS
Price: There are various price points to consider for your subscription model. Fair Folks & a Goat, a membership-based coffee shop in New York City’s Greenwich Village neighborhood, offered bottomless coffee and tea for $25 per month. Adventure Cafe offered the full drink menu for $49 per month (including matcha and lavender lattes). Pret a Manger set their price at 20 Euros per month, and Panera Bread offers rates as low as $8.99 per month, each with its own guidelines.
Waste: After one year of the membership program, Adventure Cafe noticed an increase in supply orders, costs, and waste. In hopes of reducing costs and waste, AC decided to launch a “Member Mug Program.” Members purchased a branded AC mug, which they could leave in the café overnight and pick up clean in the morning. Each cup was labeled with the member’s name, and a Polaroid of the member (with his or her mug) was hung on the café wall to encourage participation. The mug program helped control the drink portions, reduce waste, and reduce the cost of materials spent on hot and iced cups, lids, straws, sleeves, etc.
Customer Retention: The dreaded words: churn rate. When Adventure Cafe surveyed customers in New York asking why they canceled their membership, 80% of the respondents said it was because they were moving and that the café would no longer be on their route to work or home. Adventure Cafe concluded that having one location is not enough and opened a second location in Long Island City, Queens. Members were able to use their membership at both locations.
Coffee-subscription services are on the rise, but perhaps not among independent specialty cafés, which often can’t afford the costs, and risk ending up on the “customer acquisition treadmill.” Big restaurant and coffee chains like Panera Bread and Pret a Manger can afford to have many locations, the space, and the bandwidth to service all of their customers. They also have the digital infrastructure to create customer connections online and offer incentives to keep their subscribers active, while also having the one-to-one interactions at their brick-and-mortar locations.
In an online interview, Paytronix CEO Andrew Robbins said, “the (Panera) coffee-subscription service is selling like gangbusters.” He says Panera saw a 200% increase in frequency, and that subscriptions are a way of attracting new consumers, especially young ones. So, if you’re looking for a creative way to reach new customers and increase frequency in your café, a coffee-subscription model just might be the way to go—if you are ready and able to start a coffee shop chain.
ABOUT THE AUTHOR
Mai Gan (she/her) has been the owner of Adventure Cafe since May 2015. Adventure Cafe closed its doors permanently in May 2020 due to the COVID-19 pandemic and was set to open a third location in the Financial District of New York. AC pivoted to e-commerce and operates as a coffee bean subscription service. Mai is currently exploring coffee shop trends around Europe.
